Tuesday, 6th November 2018

The model score today is -30, which is immaterially better than yesterday’s, despite another rally. This means that the market is still not improving internally and is merely working off extreme oversold conditions.

Unless price stabilizes at much higher levels, the asset spreads utilized in the model suggest this will be a temporary reprieve, with much worse to come eventually.

Owners of RL, LLY & PFE should examine whether it is worth holding these stocks, as the position is rapidly deteriorating in those names.

Our asset allocation is today still 100% TLT and 0% SPY. The monthly model gave us the sell signal at October month end. All 3 models are now aligned in risk off. The fact that the model keeps on deteriorating despite price rallies is a potent tell of what might be coming soon.

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